Thursday, May 21, 2009

How to Calculate Average Growth Rates

Let's do that for the previous government. It's a two-step procedure. First, you download the growth rate data from our highly esteemed Central Statistical Office (CSO) for the years they were in power and add these up. You then divide that sum by the number of years their mandate lasted. Now, given that governments are not sworn in and kicked out at exactly the beginning and at the end of calendar years we have to be a little bit careful with our computation.

The numerator. We add the growth rates for 2001-2004 together and get 17%. Then add half the growth rate for 2005 (because elections happened in middle of the year) and a quarter of the growth rate for 2000 (because recall that when the Federation II took over there was about a quarter of the year left). Half of 2005's growth rate is 1.15% and a quarter of the growth rate for 2000 is 2.43% (9.7%/4). New total: 20.575%.

And the denominator. That's easy. Four years (2001-2004) plus half (2005) plus a quarter (2000). 4.75 years. Got that?

The result: 20.575%/4.75 years = 4.33%. Which is the number I have been broadcasting for over a year now. That number is of course different from the intellectually dishonest 2% growth rate that Sithanen and Ramgoolam have been consistently ascribing to the previous government. They just cherry-picked the low growth rate for 2005 even though they were in power for half of that year!

If we were to follow their own line of reasoning then I guess that Ramgoolam's recommendation to voters is that they only remember 2009's low growth when they go to pick the next government.